There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally. When it looks like shooting will begin momentarily the market takes a dump. What should you do with your stock, mutual funds or cash that is waiting to find a home?

Back when I was a floor trader we had a saying When in doubt get out. And that applies just as strongly today to everyone whether you area professional trader or a retired person living off your equity income.

You might say that I am not a trader or speculator so I wont do anything. Let me clarify what you really are. You are a speculator whether you want to admit it or not. The only thing that separates you from the floor trader who is scalping for a few ticks and someone who has thousands of dollars in a retirement account is the time frame. If all you do is buy and hold you still are a speculator. You are hoping the market will come back. Your broker told you so.

What your broker did not tell you is that long-term bull markets are followed by long-term bear markets of equal length. Because we have been in a long-term bull from 1982 to 2000 the mindset of the investor has become conditioned to believe the every correction will see another new high. That is true, but can you afford to wait that long? In the crash of 1929 32 it took almost 25 years to see a new high in the market averages. Do you have that much time? Also folks dont remember that many companies went out of business so your average went out the window.

With the market so precariously perched it might be best to stand aside with your cash in your hand or under your mattress. When the Iraq war starts we could see a 1,000-point move and it could be either direction. What kind of a gambler are you? Well see.

Ask yourself this question: Is this bear market caused by Iraq? Back in 2000 no one knew where Iraq was on the map much less were able to spell Baghdad. We cant blame Saddam for the loss of about 50% of market equity. When it comes right down to it the Iraq war is just another event in a long-term bear market just as 9/11 was. Events do trigger violent moves, but the overall trend is what is important and now that is down.

Another old saying is dont fight the trend. War or no war the safest place for your money is not in equities during this down phase. Cash or bonds are the only place to be.

Are you ready for the next violent move?

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.